N° 2005-09 Juin 2005 Guillaume Daudin* Jean-Luc Gaffard ...

Georges PujalsTable 3. Financial services companies in India (2003)ABN Amro (+ 300) American Express (+ 1.000)Axa (380) Citigroup (3.000)Deutsche Bank (500) General Electric Capital (11.000)HSBC (2.000) JP Morgan Chase (480)Mellon Financial (240) Merrill Lynch (350)Standard Chartered (3.000)Source: Deloitte Research (2004).According to a report 10 by Deloitte Research (2004), offshoring will continue to growthroughout this decade. The report estimated the percentage of global financial servicescompanies with offshore facilities grew to 67 percent in 2003 compared with 29 percent in2002, along with an estimated 500 percent increase in offshore jobs. By the year 2010, morethan one-fifth of the financial services industry’s global cost base will have shifted offshoreaccording to the survey. Meanwhile, the 100 largest financial institutions in the world – thosewith market capitalization exceeding $10 billion – will have moved nearly US $ 400 billion oftheir cost base offshore, reducing costs by 37 percent for each process relocated and savingeach firm on average a little below US $ 1.5 billion annually. By the end of 2005, itanticipated around US $ 210 billion of the cost base will be offshore with average costsavings to be over US $ 700 million for the largest 100. The report noted that the percentagefor large firms was significantly higher than for small firms 11 and also indicated thatincreasingly firms are setting up their own operations offshore (“captive” offshoring),distinguishing this trend from the growth of outsourcing.Deloitte Research (2003) also estimated that US $ 356 billion of operating expenses (or2 million people) would be relocated offshore in the global financial services industry withinthe next five years.10 Deloitte’s second annual offshore survey The Titans Take Hold, 2004. The survey is based on responses from43 financial institutions based in seven countries and included 13 of the 25 financial institutions in the world bymarket capitalization.11 80 percent of the world’s largest financial institutions (i.e., those with market capitalization exceeding US $10 billion) are already working offshore, with less than 20 percent keeping everything at home. For smallercompanies, the number are split 50:50 between those offshore and those staying home. That disparity creates asignificant cost advantage for the larger institutions and the gap is likely to get wider.37